Robert Reilly (Willamette Management Associates) discussed current issues in bankruptcy valuations during his session at the recent AICPA Forensic & Valuation Services Conference 2013 in Las Vegas. They are:

1. There is no bankruptcy code definition (or standard) of the term “value”;
2. The use of hindsight in the valuation is discouraged;
3. The valuation analyst’s reliance on management-prepared financial projections is often questioned;
4. The analyst’s selection of valuation variables is often questioned;
5. Current interest rates may be considered reasonably low;
6. The reasonableness of the analyst’s due diligence is often questioned;
7. Consider all of the income tax effects on the debtor value;
8. Use of industry valuation rules of thumb is often questioned;
9. Performing the cash flow test within a solvency analysis; and
10. Use of the market approach in an inactive market is often questioned.

These points are a small sampling of the expert information provided in A Practical Guide to Bankruptcy Valuation by Robert Reilly and Dr. Israel Shaked, available at BVR.